Why You Should Consider a Build-to-Order Policy

Shannon Pelky No Comments

When people first learn about our build to order policy, they tend to be a little skeptical that we can actually accomplish what we’re promising. Most manufacturers aren’t in place to follow the same build-to-order (a.k.a made-to-order) strategy as us, so it can be hard for people to believe it until they see it. However, once we do get a chance to prove our capabilities, they’re often impressed. It gives them a few reasons to question if they should consider switching to a supplier with a build-to-order policy, and here’s why:

Advantages of a Build-to-Order Policy

Better Cash Flow

Costs are broken up along the way, so you know exactly what you’re paying for throughout production. We never hide costs in the upfront price, whereas some companies might bury the fees like warehouse space and warehouse maintenance. We present the price of each fee separate and let you make an informed decision based on your product’s specific needs.

Decrease Warehouse Waste

One of the best advantages of a build-to-order policy is eliminating the extra fees associated with warehouse space and staff. It’s never fun to pay for something you don’t need, so this policy bypasses the middle man. Using lean practices, we are able to send the product through production and straight to shipping without ever placing it in finished good inventory.

Same Production Time (Lean Practices)

Some customers worry about the fact that we do not hold inventory, because they’re worried about lead times. However, as long as they’re able to place their orders ahead, the production time isn’t any different from companies who do hold inventory. Sometimes it’s even shorter.

It comes down to how that production time is used. For us, we have a goal to send a product from the raw material state through to production and on a shipping truck within three days. It could take other companies five days just to pick an item from their warehouse and get it ready to ship.

Increase Engineering Rev. Changes

Engineers love the build-to-order system because there is no finished good inventory, so they can make design changes without having to throw out any products. They can make critical revisions on the fly, up until it goes into production. This is extremely valuable when a rev. change affects the integrity or safety of your product.

Also, buyers don’t have to spend their time keeping track of POs for products with multiple rev. changes because they don’t have to keep track of any leftover inventory.

Safety Stock

Safety stocks are set up for customers who need parts/products faster than average production times. It comes at a fee, because it’s not an option that all of our customers use. For example, we create a safety stock if a customer needs parts from an outside supplier that has longer lead times than their own product’s lead time. We will also start a safety stock if they need their product built quicker than our three-day production time. Keep in mind that some customers learn they don’t need products as quickly as expected, so they’re able to take their items out of safety stock.

For a quick view, check out our Made to Order Manufacturing Infographic.

Build-to-Order Policy

These are the main benefits customers see when working with suppliers who use the build-to-order policy. They see better cash flow and less waste throughout the production process. Engineers gain the freedom to make rev. changes on the fly. Buyers spend less time managing POs for products with multiple rev. changes. At HUI, we’ve worked to perfect our lean processes over the years, so we excel at the build-to-order strategy. If you like to learn more, or need help with an industrial project, please contact us today!

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